Background

Vodka remains the largest internationally traded spirit and Russia is still the largest market despite the decline there in the category. According to an
October 2013 report from Just Drinks and The IWSR, the global vodka market reportedly managed only 0.3% growth in 2012, reaching 493.9m nine-litre cases,
with sales under pressure in Eastern and Central Europe. Value sales (including taxation) in 2012 are said to have risen by 4.1% to US$48.9bn. Retail value
sales were boosted by premiumisation across a spectrum of markets, the report states, with higher qualities of vodka outperforming the general market.
Premium-and-above vodka sales increased by 7.6% last year to 25.8m cases, while low-priced vodka was the only segment to decline. The US and Russia account
for the vast majority of the premium-and-above market: The US alone has a 74% share (18.9m cases), while Russia has an 11.5% share (2.9m cases), followed
by Brazil with a 2.3% share (601,250 cases). Another key trend is the continued growth in flavoured vodka. In fact, while neutral vodka was virtually flat
in 2012, volumes of flavoured vodka rose by 5.7% to 23.2m cases. Flavours comprised 4.7% of the global vodka market in 2012, up from 3.4% in 2008, report
stated. The US market accounts for 60% of the total flavoured vodka market, followed by Poland with 15.4% and India with 5%. The following offers a broad
sketch of some markets of interest: further information and trade data is available on application.

Russia

Over the past decade, vodka sales have fallen according to one report by nearly 30% to July 2011 - mostly in indigenous vodka value brands. More recently,
one report indicates a further drop by 25% in 2013. Much of this decrease has been due to the 23% increase in the duty on hard liquor and the increased in
the minimum price of a half-litre bottle of vodka to Rbs170 ($5.25) from an earlier Rbs125; its pressure on the illegal trade; and the shift by consumers
to new categories. The IWSR have suggested that it is the officially recorded sales that have fallen, not necessarily unofficial consumption. According to
some experts in Russia, the Russian alcohol market is heading towards a significant increase in consumption of illegal alcohol - both of legally produced
but with unpaid taxes and of non-commercial alcohol. Against this, there has reportedly been a growth recently in the premium and super premium segments.
As to production of vodka in Russia, this totalled 30.3m deciliters (800,441 gallons) in the first half of 2013, a fall of 28.3 per cent from the first
half of last year, the Russian state statistics service reported in July 2013. The decline has been accelerating since the start of the year when the
government hiked taxes. Some imported Vodka is reported as not doing as well as it used to because some indigenous producers have upped their game by
producing top end vodkas that are trusted by Russian consumers and are at the same price points.

United States

DISCUS has reported that vodka has become the backbone of the spirits industry, accounting for 32% of all volumes. In 2012, 65.2 million 9-litre cases of
vodka were sold in the United States, generating $5.5 billion in revenue for distillers. Vodka is still buoyant across all price sectors. This is an
increase of 4% by volume and 5% by value on the previous year - and an increase of some 65% by volume and 85% by value over ten years. Super-Premium brands
have led the category's growth - increasing by 10% in volume. The exception has been in some of the better known brands that have struggled recently as has
value vodka. An important growth driver has been the continued popularity of flavoured vodkas which have grown by 19% in 2012 and now account for around
21% of all vodkas sold. Over 150 new flavours or line extensions have been introduced in recent years - the majority being indigenous US products. Flavours
have mainly slowed down to low single digit growth. Imports which come principally from France, Sweden and Canada, have dropped back marginally by total
value (1.5%) and more significantly by total volume (9%) in the year to June 2013. The largest drop has been in imports direct from Russia which have
reduced by 47% by volume and 61% by value in the six months to June 2013. However, individual country totals such as this may be distorted as some
companies use warehouse hubs at certain key points around the world [such as UK in this case] for onward export to the Americas.

Canada.

Spirits Canada reported that Vodka surpassed Whisk-e-y as the largest Spirits volume category in Canada in 2010. However, total Vodka volumes decreased by
0.95% in the year to end September 2013 to 4,875,094 cases. Vodka volumes represented 27.9% of total Spirits volumes, a small decline from its 28.0% share
the previous year. Imported Vodkas represent 35.2% of overall sales volume. Flavoured Vodkas now account for 7.2% of Vodka volumes, similar to its share in
the previous year.

Rest of the Americas

Brazil, Chile and Argentina have seen increases in vodka consumption by 14%, 56% and 21% respectively by volume in 2010 according to IWSR. Again, the
premium-and-above sector has been the star performer. As a further example of this growth, EU vodka exports to Brazil have more than doubled since 2009.

Europe

The market has become congested due to the large number of brands. The economic downturn took its toll especially in Eastern Europe and coincidentally
alcohol taxes have been increased. Additionally, traditional volume consumers in some countries have moved on to new categories. According to the Just
Drinks and IWSR report of October 2013, sales in Europe declined by 6.6% to US$11.5bn in 2012.

United Kingdom

Using IWSR statistics, the Wine and Spirit Trade Association (WSTA) Market Report has
indicated that vodka showed no change in sales of vodka in 2012 compared to 2011 but a 6% increase over the five years to 2012.

India

Although vodka is still only 3% of the Indian spirits market, vodka had been growing at 10.5% p.a. from 2008-12. As vodka became popular amongst the
younger age profile and more ladies switched to vodka and cocktails. However, this reduced to -2.2% in 2011-12 (IWSR). That said, flavoured vodkas have
continued to grow though at 7.9% in 2011-12

South Africa

Vodka and cane sales which comprise 19% of the total spirits market, has seen 10% reduction there in 2013 compared to the previous 12 months.

China & SE Asia

Datamonitor gives vodka sales in China as CNY822.7m ($118.4m) in 2009, representing a CAGR of 8.5% since 2004. By the end of 2014, the category is
estimated to be likely to be worth CNY1,106m ($159.2m), with an expected CAGR of 6.1% between 2009 and 2014. Vodka volumes totalled 2.3 million litres in
2009, representing a CAGR of 6.1% since 2004 but by the end of 2014, the vodka market may total 2.8 million litres, with an expected CAGR of 4.3% between
2009 and 2014. The vodka market was led by unflavoured vodka (representing 93.7% of the total value), with flavoured vodka accounting for the remaining
6.3% share. Against that, anther comment indicates that vodka continues to struggle in China and Taiwan and in those parts of SE Asia with a large ethnic
Chinese population. That said, vodka is doing well in Korea and is generating some traction in Vietnam. Although true numbers are hard to identify,
Mongolia is potentially one of the largest vodka markets in the world.